A national sugar expert says U.S. sugar growers could face loan forfeitures this summer if nothing is done to stop Mexico from dumping subsidized sugar here.
Jack Roney, director of economics and policy analysis with American Sugar Alliance, explained under a 2014 agreement Mexico is allowed to export sugar duty-free to the U.S. In exchange, U.S. corn syrup is granted open access into Mexico.
While the U.S. has shipped Mexico about 800,000 tons of corn syrup per year, Mexican sugar exports doubled in 2013 to 2 million tons, contributing to a U.S. sugar price collapse, Roney said. The U.S. International Trade Commission and the U.S. Department of Commerce ruled in response to a complaint by U.S. sugar growers that the combination of subsidization and dumping by Mexico warranted sugar duties of 48 to 84 percent.
But in December 2014, the governments signed an agreement to suspend tariffs in favor of reference prices and limits on the refined share of Mexican sugar exports. Roney said Mexico hasn’t met the reference prices — the U.S. refined sugar price has dropped from 37.5 cents per pound when the agreement was signed to a current rate of 29 cents per pound. At 26 cents, Roney said growers come out ahead by forfeiting their sugar to the U.S. government rather than repaying their federal loans. Furthermore, Mexico has been shipping the U.S. mostly finished sugar, though the country would rather import raw cane to keep domestic mills in production. Roney holds Mexico accountable for the recent closings of sugar mills in Hawaii and Wyoming.
“Our guys are in danger of forfeiture this summer,” Roney said. “We’ve got to get this settled now.”
In early May, the U.S. Department of Commerce sent a letter to the Mexican government threatening to impose duties of 80 percent on Mexican sugar if new agreements can’t be reached by June 5.
Source: www.capitalpress.com